Quick Facts

Chad’s economic freedom score is 45.9, making its economy the 165th freest in the 2015 Index. Its overall score is 1.4 points better than last year, reflecting improvements in five of the 10 economic freedoms, particularly in policy areas related to regulatory efficiency such as monetary freedom, labor freedom, and business freedom. Chad is ranked 40th out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the regional average.

Over the past five years, Chad’s economic freedom has advanced by 0.6 points, but with a trend that has seen it bounce between yearly score gains and losses. Score improvements have been modest and evenly spread among four of the 10 economic freedoms: freedom from corruption, business freedom, labor freedom, and monetary freedom. Price stability has improved the most.

Despite these modest improvements, the state continues to interfere heavily but ineffectively in the economy, and the quality of governance is low. Price controls continue to distort the markets for essential goods, and poor maintenance of the rule of law causes uncertainty, corruption, and lax enforcement of property rights. These factors gravely undermine the prospects for long-term economic development that could combat rampant poverty.

Background

President Idriss Déby, who seized power in 1990, won a fourth term in 2011 in a highly dubious election. President Déby continues to face armed revolt by the opposition as well as charges of corruption. Security forces foiled coup plots in 2006, 2008, and 2013. Chad has sent troops to assist peacekeeping forces in Darfur, the Central African Republic, and the Democratic Republic of Congo to reduce cross-border violence and instability. Conflict in eastern Chad and unrest in Sudan’s Darfur region have created hundreds of thousands of refugees. In January 2014, Chad began a two-year rotation on the U.N. Security Council.

Although several high-profile officials were arrested on corruption charges in 2013, Chad remains one of the world’s most corrupt countries. The president’s inner circle continues to siphon off the nation’s oil wealth. The rule of law is weak, and most key officials in the constitutionally independent judiciary are named by the president. Protection of private property is inadequate, and fraud is common in property transactions.

Chad’s top individual income tax rate is the world’s highest: 60 percent. Its top corporate tax rate is 45 percent. Other taxes include a value-added tax and a property tax. Lax enforcement results in an overall tax burden of just 5.1 percent of domestic income. Government expenditures equal 23.4 percent of gross domestic product, and public debt equals 30 percent of the domestic economy.

Burdensome regulations continue to hinder private-sector development. The regulatory system lacks transparency and clarity, and regulations are enforced inconsistently. The formal labor market is underdeveloped. Inflation has fallen, but the state continues to subsidize state-owned enterprises such as an oil refinery, a tractor assembly plant, and electricity, water, and cotton companies.

Chad’s average tariff rate is 14.9 percent. Chad is a member of the Central African Economic and Monetary Community. Exports may be subject to taxation, and state-owned enterprises operate in several sectors of the economy. The high cost of credit and scarce access to financing hold back private-sector development. A large part of the population remains outside of the formal banking sector.